If you start with incremental net operating profits after tax (NOPAT) and add depreciation and amortisation to it, then you will obtain incremental cash flow from operations.

Question

Quizplus · Accepted Answer

This statement is true. Depreciation and amortisation are non-cash expenses that are added back to NOPAT to calculate cash flow from operations. This is because these expenses do not involve any actual cash outflow, but they do reduce taxable income, resulting in tax savings that increase cash flow.

If You Start with Incremental Net Operating Profits After Tax